What is a USDT payment?

What is USDT, and why use it for payments?

USDT, also known as Tether, is a digital currency pegged to the U.S. dollar (USD). This peg implies that 1 USDT can be exchanged for 1 U.S. dollar from Tether Limited, the company behind this digital currency.

USDT is in a class of digital currencies known as “stablecoins” because they are pegged to the value of an underlying asset and maintain a stable value, unlike other cryptocurrencies that fluctuate rapidly.

The stability makes USDT an ideal option for sending and receiving payments on the blockchain. USDT doesn’t fluctuate, so people are confident enough to use it for everyday transactions, knowing that 1 USDT today will be worth the same amount in the near future, unlike other currencies that can reduce significantly in value.

Many stablecoins exist, but USDT is the most widely used stablecoin globally. Over $160 billion worth of USDT is currently in circulation, and over $100 billion of USDT transactions are processed daily.

Benefits of using USDT for payments

Stability is the main benefit of using USDT for payments, in a cryptocurrency industry known for high volatility. $100 worth of USDT today will remain worth $100 in the future, so many are confident to transact with it. This stablecoin hasn’t lost its peg to the U.S. dollar since its inception in 2014. Unlike Bitcoin, Ether, or many other cryptocurrencies, you wouldn’t have to worry about value reductions with USDT.

Another benefit is that it speeds up international transactions, as USDT payments can be processed within minutes, unlike fiat currency transfers, which banks can take several days to process. Likewise, you can send and receive USDT worldwide with low fees, especially when dealing with amounts below $100. In contrast, processing foreign transactions under $100 through banks can incur fees of $10 to $30, making them not worthwhile.

How USDT works in the real economy

We’ve explained that USDT is stable because it’s pegged to the U.S. dollar. But who maintains this peg, and what guarantees its long-term stability? Let’s explore how it works.

The company behind USDT is Tether Limited, one of the biggest companies in the cryptocurrency industry. Tether creates units of USDT, which it sells for the equivalent in dollars. Tether has an agreement that allows USDT holders to redeem their tokens for dollars from Tether’s reserves.

Tether invests the dollars it receives in real-world assets, such as government bonds, and retains a small percentage in cash to cover short-term redemptions by USDT holders. The company earns money from redemption fees and interest accrued on its invested assets.

According to Tether Limited’s latest reports, it holds over $120 billion worth of U.S. Treasury bonds and other easily sellable assets, such as gold, in addition to significant cash holdings. The idea is that Tether always has underlying assets to redeem customers’ USDT tokens for real U.S. dollars, giving customers confidence to trade with them.

Over $100 billion worth of USDT changes hands every day. It is the go-to currency for trading, lending, and other commercial transactions where people choose to accept stablecoins as payments. USDT is a viable alternative to using the U.S. dollar, which can be difficult to obtain and process under some circumstances.

How to start using USDT for payments

If you’re wondering how to pay for goods and services with USDT, the process isn’t far off. The first step is to create a cryptocurrency wallet that will hold the tokens. Then, you can buy USDT tokens on the open markets and receive them in your wallet. With the USDT tokens in your wallet, you can transact on different platforms that support the USDT payment method.

Creating and setting up a crypto wallet

You can create a cryptocurrency wallet in a few steps. Many wallet providers, including B2BinPay, allow you to sign up and create a secure wallet for storing, receiving, and sending USDT tokens across various blockchains. You can choose a suitable wallet provider and follow their instructions.

Where and how to buy USDT

After creating a wallet, you can acquire USDT on a cryptocurrency exchange like Coinbase and Binance. You can buy USDT with fiat currency or exchange other cryptocurrencies, such as Bitcoin and Ethereum, for the equivalent amount in USDT. The tokens will be deposited directly into your wallet, and you can begin using the USDT payment method.

How to choose a reliable exchange to buy Tether

The main factors to consider when choosing an exchange to use the Tether payment method include:

• Security. You need an exchange with robust security features, including advanced encryption, two-factor authentication, multi-signature wallets, and regular audits. Security is a top priority because crypto exchanges are often targeted by malicious actors seeking to steal funds.
• Regulation. Choose a cryptocurrency exchange that complies with your jurisdiction’s digital currency laws. A compliant exchange ensures you don’t run into legal scrutiny and protects you from transacting with malicious parties.
• Fees. Consider the transaction fees charged by a crypto exchange. You can compare different platforms and choose the one with fees you’re comfortable with.

<H2> Ways to pay with USDT

You can use USDT to pay for online services, such as website subscriptions, web hosting services, and business apps. You can also use USDT to pay for goods at retail stores, albeit indirectly, through debit cards that convert your USDT into fiat for the retailer.

<H3> Paying for goods and services online

Some platforms let customers pay directly for their services in USDT. For example, many online games allow you to pay for virtual goods using this stablecoin. Some freelance platforms now let businesses pay workers directly with USDT tokens.

Paying for goods and services with Tether is a straightforward process. The seller will issue a payment request, and you’ll simply authorize the payment from your crypto wallet. The payment will be confirmed within minutes or even seconds.

<H3> Paying in retail stores

You can use USDT to pay for goods at physical retail stores. A few stores accept USDT directly, but most do not. Instead, you can use a crypto debit card that automatically converts the USDT in your wallet into fiat currency for the retailer.

Suppose you choose an item with a $100 price tag and swipe your crypto debit or credit card, the equivalent of 100 USDT tokens will be deducted from your wallet, while the retailer will receive $100 in fiat.

<H3> Using crypto debit cards

Many popular crypto exchanges offer debit cards that enable successful USDT payments for customers. This debit card will be linked to your wallet on the cryptocurrency exchange. You can use the card to pay for everyday goods priced in fiat, and the equivalent in USDT tokens will be deducted from your wallet.

<H4> Overview of popular cards

Bybit, Coinbase, and Binance are examples of crypto exchanges that offer debit cards to customers. They charge different issuance and fiat conversion fees and offer different cashback percentages. Let’s explore these details below.

‍

<H3> International transfers using USDT

USDT doesn’t have the typical restrictions you’ll face when sending fiat currency across borders. Cross-border USDT transactions can be processed within a few minutes, unlike wire transfers, which can take several days to be credited to the recipient’s bank account.

Another key benefit is the ability to transfer USDT with minimal fees. Depending on your cryptocurrency platform, transaction fees can be as low as 0.1%. Meanwhile, banks charge a flat fee of $10 to $50 to process an international wire transfer. USDT payment is more affordable, especially when dealing with small amounts.

<H2> Where is USDT accepted as payment?

USDT is accepted as payment in different online and physical stores. At these spots, you can pay either directly with USDT or use a debit card that converts your USDT to fiat currency.

<H3> Online stores and platforms

Some e-commerce sites directly accept USDT as payment. Examples include Newegg, which sells electronics, and Overstock, which sells home decor and furniture. Many other smaller stores also accept USDT from global customers.

‍

<H3> Physical retail locations

USDT acceptance among physical stores remains limited, partly due to regulatory issues and the reluctance of traditional banks to process USDT payments on behalf of retailers. However, the workaround is to use a crypto debit card that seamlessly converts USDT in your wallet into fiat for the retailer.

<H3> Travel booking services

A handful of travel booking platforms now accept USDT from customers. Travala is a notable example, as are some smaller rivals. In cases where a travel booking provider doesn’t directly accept USDT, you can use your crypto debit card to pay, and USDT from your wallet will be converted into fiat.

<H2> Essential security measures

Security is crucial when using USDT for transactions. Your cryptocurrency exchange will have features to safeguard your accounts, but you also need to play your part by adhering to the following tenets:

<H3> Never share your personal information

Don’t share sensitive information about your wallet, especially your private keys and recovery phrases. Anyone who has this information can use it to access your account, so they should be guarded jealously. The standard practice is to store them offline, rather than on internet-connected devices. For example, you can keep them in a secure physical deposit box or in a cold wallet that is not connected online.

<H3> Enable two-factor authentication

Two-factor authentication (2FA) adds an extra layer of security to your crypto wallet account. With it enabled, having the correct username and password isn’t enough to access your account. Instead, you’ll need a unique PIN sent to your mobile number, email address, or generated by an authenticator app.

The PIN, which is generated afresh for each login attempt, provides the extra security layer. Crypto exchanges and platforms offer 2FA as a standard feature.

<H3> Backup your wallet

Wallet apps issue a recovery phrase for each wallet, which can be used to recover a wallet if you lose the credentials for it. Backing up your wallet means storing copies of your recovery phrase in secure, offline locations. For example, you can write the phrase on paper and store it in hidden locations at your home.

Recovery phrases are long and scrambled, so they aren’t easy to memorize offhand. Storing them in secure locations ensures you can recover your wallet even if you lose the private keys.

<H2> How to accept USDT payments on your website

If you run an online business, you can accept USDT payments from customers. You can do this by integrating a payment gateway that collects the USDT tokens and deposits them into your secure wallet. Numerous payment gateways exist, and you can choose one that fits your needs.

<H2> Choosing a payment gateway

The main considerations when choosing a gateway to accept Tether payments include:

• Fees. Different payment gateways have different processing fees, depending on the volume of USDT transactions. 0.1% to 2% of each transaction is standard, so choose a platform with fees that you’re comfortable with.
• Ease of integration. You need a Tether payment gateway that can be easily integrated with your online store. The best gateways have a simple integration process that you can do yourself or outsource to a technical expert.
• Security. Your payment gateway should have advanced security features to safeguard your funds for long-term storage or immediate withdrawal.

<H4> Popular solutions: Bitpay, CryptoCloud, CoinsPaid

Bitpay, CryptoCloud, CoinsPaid, and B2BinPay are prominent gateways you can integrate into your site to enable the USDT payment option. Let’s explore their core features.

<H3> Integrating a payment system into your business

Integrating a payment system into your website or app can get technical, but it isn’t overly complicated. You’ll be given API keys by your payment gateway, which will be inputted on your e-commerce site’s backend. Popular e-commerce platforms like Shopify make this API integration seamless, allowing you to begin accepting USDT payments quickly.

<H3>Creating crypto invoices and billing

When a payment gateway is integrated into your website, customers can click the payment button to initiate the process and send you the required USDT tokens. Alternatively, you can create an invoice and send it to a customer’s email address, allowing the customer to click a button to transfer the requested amount to your USDT wallet. Payment gateways make issuing invoices easy; each invoice will be assigned a unique link that you can send to the customer.

<H2> The future of payments with Tether (USDT) and cryptocurrencies

USDT adoption has shown no signs of slowing down. Over $160 billion of USDT is currently in circulation, compared to roughly $90 billion at the beginning of 2024 and $66 billion in early 2023. Effectively, USDT circulation has nearly tripled over the past two years and almost doubled in the past year.

This chart illustrates the rapid rise in USDT circulation since its creation in 2014.

Source: CoinGecko

USDT isn’t the only booming stablecoin. Other peers like USDC and Binance USD (BUSD) have also experienced increasing popularity in the crypto markets. The growing market capitalizations suggest that stablecoin payments will become normalized over time.

Despite their already enormous market capitalizations, USDT and its peers have much bigger potential to break into the mainstream financial sector. The trend is that more businesses are beginning to accept Tether as a form of payment, so expect stablecoins to become increasingly convenient to use.

<H3> The development of crypto payment systems

Crypto payment systems are growing rapidly and entering the mainstream. Their natural advantages include fast payments at significantly lower fees compared to traditional fiat payments.

Crypto payment gateways are at the forefront of this rapid shift, enabling businesses to integrate crypto payments seamlessly into their websites and stores. With a few adjustments, you can integrate B2BinPay into your online platform and start accepting USDT payments today.

B2BinPay enables speedy payments at competitive rates. Our platform supports USDT payments, as well as many other tokens, including Bitcoin, Ethereum, Litecoin, and Dogecoin. You can store received tokens in your B2BinPay wallet long-term or withdraw them to a fiat bank account. Choose B2BinPay as your crypto payment gateway to enjoy seamless transactions.

<H3> Regulation and legal status of USDT in different countries

Regulation is a significant obstacle to the widespread adoption of USDT and other stablecoins. Traditional businesses and banks are skeptical about accepting stablecoins if there aren’t clear regulations surrounding their use. The good news is that this issue is gradually being resolved.

The U.S. government, which oversees the world’s largest financial markets, recently enacted the landmark GENIUS Act, outlining clear regulations for stablecoins, including 100% reserve backing with liquid assets and avoiding misleading marketing practices.

Stablecoins operating in the U.S. are required to hold underlying reserves in U.S. dollars and treasuries. With this precise regulation enforced by the U.S. government, banks and businesses will become more confident in integrating stablecoins into their financial operations.

With USDT dominant in the stablecoin market, it’s positioned to ride the wave of growing adoption spurred by the GENIUS Act. It’s a good time for businesses to accept USDT payments for goods and services.

<H2> FAQs

<H3> How does USDT differ from other stablecoins such as USDC or BUSD?

Tether Limited issues USDT, while USDC is issued by a joint venture between crypto giants Circle and Coinbase, and BUSD is operated by Binance, the world’s largest cryptocurrency exchange. They are all stablecoins pegged to the U.S. dollar. The stability makes USDT a viable payment option for many businesses.

<H3> Can I use USDT without registering on a cryptocurrency exchange?

Yes, you can use USDT without formally registering on a cryptocurrency exchange. For example, some banking apps allow you to convert your fiat currency balance into Tether, which is deposited directly into your wallet. However, a crypto exchange is the most convenient way to buy USDT and use the tokens for everyday transactions.

<H3> What fees are incurred when transferring USDT?

When transferring USDT to another wallet, you’ll pay a transaction fee to the blockchain hosting the USDT tokens. The most popular blockchains for the USDT payment method are Ethereum (ERC-20), Tron (TRC-20), and BNB Smart Chain (BEP-20), and fees differ depending on network congestion.

If you’re using a cryptocurrency exchange to transfer the tokens, the exchange also usually charges a transaction fee ranging from 0.1% to 0.5%.

<H3> How do I convert USDT to fiat currency?

You can convert Tether tokens to fiat currency via an exchange. It’s like buying fiat currency and paying with USDT. After converting tokens to fiat currency, it can be quickly withdrawn to your bank account.

<H3> Can I cancel or get a refund for a USDT payment?

Crypto transactions are irreversible once confirmed on the blockchain. Hence, always double-check before initiating a transaction, as a refund only depends on the goodwill of the recipient.

<H3> How do I choose a safe cryptocurrency wallet to store USDT?

When selecting a wallet provider, prioritize security features such as two-factor authentication and advanced encryption. B2BinPay offers a secure wallet solution to safeguard your USDT in the long term.

<H3> Is there a minimum transfer amount in USDT?

Technically, there’s no minimum amount of USDT tokens you can transfer on the blockchain. However, some crypto wallet apps and exchanges impose minimums of $1 or $2 to avoid the hassle of processing negligible USDT payments.

<H3> How fast are transactions in the USDT network?

USDT transactions are typically settled within 5 minutes, which is much faster than traditional banks when transferring funds to a foreign recipient. However, some transactions can take up to 20 minutes or more, depending on network congestion and your crypto exchange’s infrastructure.

<H3> Do I have to pay taxes when using USDT for payments?

If you use the Tether payment method, i.e., receive USDT as payment for goods and services rendered, many jurisdictions consider it taxable income. You’ll pay the applicable tax rate based on the value of the USDT in your local currency.

For example, if you are based in the U.S., you’ll pay taxes on the equivalent amount in U.S. dollars, which is simple to calculate because USDT is pegged 1:1 to the dollar.

<H3> How can I check the status of a USDT transaction on the blockchain?

You can check your crypto exchange or wallet app for the unique transaction ID. Then, you can search for this transaction ID on blockchain databases like Etherscan and Tronscan. The scan result will indicate whether the transaction is pending or has been settled.

<H3> Which stores already accept USDT as payment?

Some big online stores, such as Newegg and Overstock, accept USDT payments. Many smaller online stores also accept USDT directly from customers.

<H3> Can I link my USDT wallet to PayPal or other payment systems?

Technically, you can link your USDT wallet to other traditional payment platforms, but it often requires converting the USDT to fiat currency first. However, in cases of linking your USDT to other cryptocurrency payment systems, you won’t need to convert the USDT initially.

‍